tv Capitol Hill Hearings CSPAN January 27, 2012 1:00am-5:59am EST
strategy, and the one thing that frankly distinguishes this from past drawdowns, as i have said before, is that in past drawdowns usually we have come to the end of a particular threat that we confronted, and we could move on. the reality is as we draw down from iraq and afghanistan, we still face a number of very important threats in the world. obviously, we are continuing to fight a war in afghanistan. we continue to face the threat of terrorism, as successful as we have been in confronting that. we continue to see that challenge, whether it is in yemen, somalia, or elsewhere. we will have to continue to confront the threat of terrorism.
we see the threats coming from iran, and a nuclear-capable iran represents a threat to us and to the world. weapons of mass destruction, proliferation of weapons of mass destruction are a concern. north korea is a concern because they, too, are developing a nuclear capability. add to that the turmoil in the middle east that we have to confront, then the cyber threat and the potential for cyber warfare -- you can see the vast array of threats we have to confront with the force we have designed. it is all of those. >> i am sorry. that is the last question. the deputies are about to come to the podium. thank you very much.
>> we would like to welcome to the table the deputy secretary. [laughter] deputy secretary and the vice chairman. we will not be taking a five- minute break. >> ok. welcome again. i am not going to repeat everything that was said before. we are here to answer your questions. i hope you all have a copy of the white paper that describes the key decisions we have made in connection to the 2013 budget and the strategic guidance which we released a few weeks ago. i will just comment on one of the questions that was already asked. i should say, by the way, that this is a pretty complete
description of the many tens of individual decisions we made. there are many items in here. we are happy to answer questions about any items that are in the white paper. we will not be releasing the full budget until the president releases the full budget, and we will not be going into detail on these items until we of had a chance to confer with congress, which will begin next week. fundamentally, the detailed in here describes the enormity of the adjustments that we were required to make. the secretary described pretty well -- the base budget is not decreasing over the years ahead, but neither is it continuing to rise in real terms, as it has over the past few years, and as we planned before the budget control act was enacted. the difference between the
amount that we planned to have last year and that we now plan to have, that is where the before hundred $87 billion comes from. $259 billion over five years, and adjustment of about 8%-9% overall, which is very substantial by any measure. if you add to that the reduction in overseas contingency operations spending and consider the entire defense budget, you can see that we needed to make the most consequential adjustments the defense department has had to make budgetary in more than a decade. so it is very large.
these decisions were steered by the strategic guidance of the secretary and the chairman. came directly from president obama and from them, and the sequence of strategies in the budget is obviously critical to us. no part of the budget was not examined and no part was sacrosanct. we looked at everything. and there are a lot of tough decisions in there. some parts of the budget work increased because of their importance to the country and the future, that meant that other areas took more cuts. the result, and the secretary made this point and i just want to reemphasize it, a carefully balanced package. this cannot be looked at or modified piece by piece, since a change in one area inevitably requires offsetting changes elsewhere. unbalancing the overall package. so is a package. the paper describes it in three parts.
the first, a continued effort to make more disciplined use of the taxpayers' money. that was alluded to in one of the questions. second, we made investments in accordance with the strategic guidance, and third, we made modest but important adjustments in personnel costs. because of the value placed on the people in the all volunteer force who are what make it the world's greatest force, there are lesser cuts, but the senior leadership, including the joint chiefs of staff, believe strongly that this category needed to be included in overall package. these are the three parts of the package and we are pleased to answer your questions. >> on the nuclear arsenal, president obama had given his pledge to the aspirational goal of going to 0. [unintelligible] there is no cut at all except
for slowing the couple of years. does this imply there be no reductions in the arsenal after negotiations with the russians, and there's no effort to cut the nuke forces even if it makes sense to our country in the current environment? >> there are no cuts made in the nuclear force in this budget. the white house, and we are obviously working under their direction, are considering the size and shape of the nuclear arsenal in the future, so when those decisions come, we will factor them into our budget. i will make a couple of comments about what is in this budget that does bear upon the nuclear triad. one you mentioned, which is a slip by two years in the development of the ohio class replacement submarine. this is not a strategic decision, this is a managerial decision made partly for budgetary reasons, but mostly because that puts the ohio class replacement on a more
predictable and stable schedule. the second thing i will note is we did protect the bomber force in its entirety in this budget. that is not just the nuclear bomber force, it is a conventional bomber force that is part of our higher capability and as we consider our force as it applies to the asia-pacific region and to the middle east, bombers will play an important role in there. we are beginning anew, stealthy, long-range strike platform, and we did protect that. we are continuing with that. we started that last year. there are some things that bear on it, but no decisions that are strategic in nature reflected in the budget. >> secretary panetta listed the probation on the -- there is is a slowing in production to allow more development to take place. the marine corps has expressed an urgency to get this many of these as soon as possible to
get the carriers in the fleet. while be produced vehicles will be going down, the number of these produced will be going up. secondly, can you address whether or not any of the developments or requirements for jss were going to address it there any changes made over the threat of cyber warfare and its potential vulnerability to that? >> there are several questions imbedded in there. i'll take a few. with respect to the joint strike fighter, the secretary said it right. we want the airplane and all three variants of the airplane. we got some good news this year with respect to the stovall.
it was taken off what secretary gates called probation a year ago. that was the result of some good engineering work done last year. that means all three variants can go forth. at the same time, the issue with the joint strike fighter of cost and performance of the program in its difficult position -- for the program we are transitioning and trying to reach full rate production, that is still a concern to us. all those associated with management of the program, our industry partners, are working our way through that. we will write up that curve to full rate production as and when it is economically prudent to do it. as far as the stovall variant is concerned specifically, with the probation behind us, all three variants are now out more or less on an equal footing in
terms of their engineering readiness to go forward. it becomes a decision for all of us and also for the marine corps the rate at which they procure. >> all three variants, they are terrific airplanes and we are committed to it. represents the future of tactical aviation in this country. we just need the ability to manufacture so we can catch up and start flying. we are anxious to get into the fleet. >> is any of the development being adjusted with regard to cyber vulnerabilities that might be in the aircraft? >> not that i am aware of. >> we are very attentive as a general matter to cyber vulnerabilities in weapons systems, hours and others. it is a highly computerized airplane.
>> and now you don't want to pick apart individual items but i want to ask about the carrier decision, specifically why we need it. why in the of the big ticket items? there is no cancellation here like we have come to expect. >> let me ask the admiral to speak to aircraft carriers in general. i think be open this area, there are 50 or 60 things listed in their that we were not able to do because of the reductions in our plan budget from the budget control act. you go in here, you will find plenty of things that we had planned to do that we are not going to be able to do. you are right, they are not the things that are most important to our strategy and to our future. that is precisely -- it is the things that are most important to our strategy and our future that we protected.
>> as far as the carrier goes, i think it is well-documented and carefully examined it inside the apartment and consulted with the white house. everybody is in agreement that the capability, the flexibility, the independent capability of the carrier, the applicability and it's particularly useful role in the middle east and the pacific, which is wearing have emphasized most of the regional strategic focus here, just makes it a particularly adept platform for the top of things we want to do strategically in the future. it did not make sense to take out. enforcement so we will stick with 11 carriers. >> the strategy prioritizes of
forward posture and talks about in the western pacific, the secretary talks about getting rid of logistical ships and getting rid of the ticonderoga class cruisers as well, without replacement. how does that square with the posture of being fully deployed, especially in the western pacific? >> first of all, were the things we have to remember as a strategy is that in many cases is a lot more about where you are going to cut, rather than where you are going to add. there are much pure reductions in the things we are focused on in the pacific, to include naval forces. this is really a budget that has to look out to 2020 for some of the particular decisions, particularly navy type things because they are big muscle movements. but you will find a gradual shift from east to west in
terms of aircraft carriers, submarines, and logistics and the like. i will leave it to the navy to articulate that over the coming week or so. >> looking at what we are doing with australia, the possibility of combat ships in singapore, what we are doing in guam. there is quite a bit that represents the movement into the asian pacific and around to southeast asia and the indian ocean. so you have to look at the whole picture. >> the secretary emphasized that you want to keep mid grade officers, people who have gotten a lot of experience in iraq and afghanistan. given that a lot of this budget and the strategy diminishes in some ways the institutional
role of the army in national strategy and cuts the army [unintelligible] what you say to someone in that situation in the adjustment to a peacetime army for why they should stay? >> i want to say something about that first. i will repeat your premise of the question about the institutional army. the army is in the midst of a transition, a strategic transition. it has, as all of our services have, but the army in particular, of necessity been very riveted on counterinsurgency operations in iraq and afghanistan, and is now returning to full spectrum training and full spectrum capability. so it will be still the army that can dominate any other army anywhere. it is trying to build forward into that post iraq and eventually post afghanistan army. so it will have a very
important role in the strategy and the asian pacific area and overall in the middle east. the premise is not right. >> all four services are absolutely critical to the strategy, and to try to single one out as being less critical than others does not really get the point of the strategy. i have some of privately in my own mind, it's the military itself or a stock right now, i would be buying it. i would be applying that to the army and equally as well to the navy and the air force and marine corps. just because we are drawing it down to reduce some of the capacity we have built up in a counterinsurgency environment, it tends to ignore the fact that the have a tremendous potential role in asia and the korean peninsula, if north korea should ever become foolish enough to be aggressive there. all the way through the spectrum of missions that the army can execute, to include
what result in somalia just this week. the helicopters that pulled those people out of that camp were army helicopters. across the full spectrum of operations to include an important role the army will assume in regional engagement. i am big on the army right now. they have an important role in the strategy. >> so you don't think there is a problem with some people who might be made great officers to ask themselves why they should stay? >> we have terrific leadership in the army. they have a terrific mission, and i don't think we will have any trouble keeping those people at all. >> the defense industry consultant put out of breivik implying the program has been canceled, terminated, and yet i look to your material, you are basically truncating the third generation model. what army helicopters will be used? blackhawks or chinooks?
>> this is a little tedious, because there are several different versions of the block 30. it is a good example, and we highlighted it in the white paper. it is an example of the way that we need to pay attention to cost performance with a budget like the one we have. blog 30 was supposed to replace the u2 for taking pictures from the air. that was the idea. there are other forms of global block. -- global hawk. the block 40, which is a navy version, an allied ground surveillance which is a version for the allies. those are not affected by this, but the block 30 priced itself out of the niche of taking pictures in the air.
we will continue to use the u2. we had hoped to replace it with a global hall, but the global hall became expensive. that is the fate of things that become too expensive in a resource constrained environment. >> this one of the four, the block 30, is cancelled. >> i would just say that admiral bill loch raven is a friend of mine, but he is also a tough guy and i don't want to get a cross purposes with him are revealing the capabilities of his unit. that is a really impressive operation that was a joint operation. we had on the aircraft navy seals, and it was very well executed. >> on sequestration, i am curious. has the department done any war gaming, if you will, on what it would do with the strategy of
congress does not change the current -- it would seem to me as good stewards of the taxpayers' dollars, it would make sense to at least think about it, given that the political environment in this country is doubtful. >> i will just make a couple of comments on that. this budget is based upon the fiscal guidance that we got from the office of management and budget. the work of the super committee failed sometime in mid november. we were well on the way to putting this budget together at that time. we said repeatedly, the secretary said it, the chairman said it, that both in the manner that sequestration would occur and the magnitude of the cuts, that would be disastrous for us. the strategy we gave you two or three weeks ago, we would have to start over again with sequestration.
the secretary said it all right at the end of his sentence, which is that congress needs to do its work here. sequestration is no way to do business. >> if i could add, we have just been through a very healthy process in this part of developing this budget. something i've never seen before in my 33.5 years in doing this sort of work. we did strategy and then we allowed strategy to guide the budget decisions. very refreshing. if we get into a sequestration position, that turns that entire process on its ear and basically takes the chain saw to the budget that is developed and we will have to write a new strategy. that is not the way we want to do business. >> some of the programs are being delayed or reduced. when you do that for unit cost, it goes up. are you creating further problems down the line where you won't be able to afford these changes?
>> we are very attentive to that. in some cases, that will occur, but managers of those programs are trying to mitigate exactly that effect, when your vote slipping and reducing the size. >> the reduction in deployable regional missiles, where you expect that to have the most effect, and how much capacity to the regional allies have to absorber more responsibility on their shoulders? >> first of all, we remain very committed to the european based adaptive type of approach and we intend to keep that on track. for the other regions, we are not going to decrease anything we have done so far. we may just grow, as many other things in this budget will find themselves in a situation that they will have to grow a little bit slower. we will work closely with our partners to ask them to invest in some of this capability as we invest in it as well. in several regions of the world
you will see that phenomenon occurred. we are still committed to working closely with our partners to defend against missile attacks from rogue nations. >> [unintelligible] >> it would put the air force below the limit the congress has set. as the department discussed moving at lower is that it would be? >> we discussed that and all the other changes we are proposing. after all, it is the president's budget proposal to congress. the airlift, this is capacity, access need. -- that is excess to need. in this budget in burma, we cannot justify retaining capacity that is excess to need. >> could you please elaborate to emphasize the asia-pacific? what is the biggest challenge
for the united states in this region? secondly, negotiating to involve more u.s. military presence in the philippines. what would be the indication for u.s.-china relations in the context of the south china seas? >> the final answer to question is this is a very dynamic region that is going to be a central region to the world going forward. the united states has played a pivotal role in the asia- pacific region for decades. it is that peace and prosperity in part brought by the american pivotal military role there that has allowed the prosperity of all countries there, to include china. you mentioned china, and that pivotal role is something we intend to maintain and sustain. that is fundamentally the reason for being mayor.
-- for being there. there are a number of issues in areas. it is a very vast region, and we intend to keep our pivotal role there. you mentioned the philippines. we have a good relationship with the philippines, including a good security relationship, and we intend and wish to build on that in the future. >> we have time for two more questions. >> this gentleman right here. >> will the combat operation include some of the risk that come with a smaller force? >> we are constantly cognizant of that and we do not plan on letting any of the risk and strategy on our forces that are currently in combat. we are very committed to taking care of those troopers and making sure that have the resources they need to get the
job done. the short answer to the question is that no, we are not putting risk on current combat operations. >> how is the delayed schedule more predictable? how're you doing on cost controls, and how concerned are you that the program will basically eat the entire shipbuilding accounts in the future? >> the second and third are related. with respect to the schedule, the schedule as it was was an aggressive one, maybe even verging on optimistic. all i am saying is this is a safer schedule. we are sure reconnect the schedule, so it is a little more secure from a managerial point of view, it is better place to be. terms of cost control, on the ohio class replacement, the initial cost estimates came in quite high, unacceptably high. so high that they did have, precisely they did present exactly the concern that you mentioned, namely that in 2020-
2030, they would consume a disproportionate share of the navy's shipbuilding budget. for that reason, the navy worked very aggressively on the requirements, and i should mention that the admiral is doing that as a more general rule in the requirements process here. they are working hard on saying do we really need this or that, and to get the design, to amend the design, look at the drivers of cost in the design, and manage the cost down. and that was done from a figure well in excess of 6 billion per boat to the neighborhood of 5 billion per boat. that is something we will need to do with all our programs going forward. we have to ask ourselves, in this kind of budgetary environment, how much is good enough? is the 8% solution sufficient?
80% solution sufficient? that is what was done with the ohio class replacement, and that is why it will be affordable. >> with that, i thank you. >> for our friends in the press, if you have any additional questions regarding context of particular question, please connect with our press operations. we do have folks who have been involved in these decisions standing by to be able to respond to more of your questions. thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] the >> julian barnes had a front-page piece in the wall
street journal this morning titled "fewer troops." what is behind the president's changing strategy at? the use of special forces and the use of drones? >> the obama administration, there's no question about it, has grown tired of the expense and length of conflicts like the one the u.s. fought in iraq and is still fighting in afghanistan. but they are emphasizing, kinds of forces. we see a buildup of drones in the special operations forces.
we see it investments in those services. things that could be used to counter a rising china or in korea or things in the persian gulf. >> the administration proposing five. 25 million. where will the biggest cuts happen? >> the biggest player over time are the cuts that will come over the next few years to the army. personnel costs are growing very fast. discuss the army and this will be a big player. -- this cuts the army. we have cuts to older transport aircraft, cuts to older naval
cruisers. the timing of the f-35 purchase has been slowed down. some newfangled systems are on the cutting block. the pentagon announced the current generation of global talks would be canceled. this was meant to be a replacement for the old spy planes but the costs spiraled at of control. they will try to go to the next generation beyond. they are giving up on the current one and that is a warning to defense contractors. keep your costs down or your program will be counseled. >> what will the fight be when the administration officially presents the budget? >> it will be fierce. mr. panetta made some references to that. as soon as this came out, we
have statements from john mccain in the senate. there were questions about cuts to the marines and army. senator mccain made the point, we just went through a war where we found that our military was too small and we had to spend a lot of money building and up. is that the smart way to go? the special operations forces are great, the drones are great, but those are not enough all enemies defeat fo that the u.s. would face. mr. panetta and the pentagon would respond that while there are cuts here, we are keeping a
robust conventional force. the navy will be very strong. the air force is gaining some new capabilities. the army will be more deployable and more capable. >> julian barnes of the "wall ."reet journal thank you for joining us. >> thank you. >> in a few moments, president obama on energy policy and jobs. in half an hour, a hearing on the u.s. and global economic outlook. then, the state of the indian nations addressed. then, british tehran on the future of the eurozone. real estate for
closures with the president and ceo of the mortgage bankers association. we will talk about "the age of austerity," and we will focus on u.s. manufacturing. "washington journal" is live on c-span every day at 7:00 a.m. eastern. >> i do believe that the west for all of its historical and shortcomings, the west still today represents the most acceptable and workable political culture. >> in 1991, the united states was the only global superpower. today, how to restore its status
in the world from the former national security adviser on his strategic vision. also, did fdr used world war ii as a cover to make a more powerful executive branch? sunday night at 10:00, the new privacy is no privacy. how your rights are being eroded by social networks. during a speech and energy policy and jobs today, president obama announced the sale of new oil and gas drilling permits in the gulf of mexico. he spoke at a ups hub in las vegas. >> thank you so much.
hello, nevada. it is great to be back in las vegas. back.ve you i always say when we stay here for the night, i have to watch my staff to make sure they get on the plane when we leave. sometimes they continually missed the flight. thank you for the introduction. scott, thank you. i want to thank all of the elected officials and the tribal leaders who took the time to join us. i just wanted to mention something that i said to scott and joe and that is that ups i think it deserves just extraordinary credit for being
the best space, or the best businesses we have in the united states. the reason is that we have the most outstanding workers and the relationship between its work force and management "rating to figure out how to make things better. this is an outstanding organization. [applause] i am here to talk a little bit more about what i talked about at the state of the union tuesday night. what i want to focus on is how we are going to restore the basic promise of america. something that folks here at ups understand.
if you work hard, do the right thing, you should be able to do well enough to raise a family, own a home, send your kids to college, and put a little bit away for retirement. that is the american dream. that is what most people are looking for. they don't expect handout or anything to come easy. they do expect that if they're willing to work hard to try to get ahead, then they can have a sense of security and dignity help make sure that their family is moving forward. that is what americans are looking for, that is what americans deserve. three years after the worst economic storm in generations, our economy is growing again.
our businesses have created more than 3 million jobs. [applause] last year, businesses crated the most jobs since 2005. american manufacturers are hiring again. we have more work to do. but what we can't do is go back to the same policies that got us into this mess in the first plate. we have to move forwards. we cannot go back to an economy weakened by outsourcing and bad debt, phony financial promises. on tuesday, i laid out my vision for how we move forward. i have laid out the blueprint for an economy that has still
collapsed and has a firm foundation. we are making stuff, selling stuff, moved it around put to ups drivers are dropping stuff off everywhere. that is the economy we want. an economy built on american manufacturing with more good jobs and more products made here in the united states of america. [applause] an economy built on american energy field by homegrown and alternative sources that make us more secure and less dependent on foreign oil. an economy built on the skills of american workers from getting people the education and training they need to prepare for the a also to compete for the jobs of tomorrow. [applause] i talked about an economy that
is built on the renewal of american values -- hard work, responsibility, and the same set of rules for everyone, from wall street too main street. that has to be our future. [applause] that is how we restore that basic american promise. part of my blueprint is for an economy built to last with american energy. that is why we are here. for decades, americans have been talking about how do we decrease our dependence on foreign oil? well, my administration has begun to do something about it.
we negotiated the toughest feel efficiency standards in history. last year, up we relied less on foreign oil than in any of the last 16 years. that has not gotten a lot of attention but that is important. we are moving in the right direction when it comes to oil and gas production. today, i am announcing that might administration will open up 38 million acres in the gulf of mexico for additional exploration and development which could result in a lot more production of domestic energy. as i said on tuesday and as the people here at ups understand -- even with all of this oil production, we only had about 2% of the oil reserves. we have to have it strategy that
develops every source of american energy. a strategy that is cleaner, cheaper, and full of new jobs. a great place to start is with natural gas. some of you might not have been following this but because of new technologies. because we can access the gas that we cannot access before, we have a supply of natural gas under our feed that can last american nearly a hundred years. when i say under our feet, i don't know if there is gas right here. i mean, in all of the united states. using it to power our cars, homes, factories in a cleaner and cheaper way. the experts believe it could
support more than six had thousand jobs by the end of the decade. we wheat are the saudi arabia of natural gas. we have got a lot of it. removing the natural gas has to be done carefully. people consent about the environment and health of our committees. that is why i requiring that all companies drilling for gas on public land to disclose the chemicals they use. we want to make sure this is done properly and safely. america will develop this resource without putting the health and safety of our citizens at risk. we have to take advantage of this incredible natural resources. think about an america where more cars and trucks are running
on domestic natural gas than on foreign oil. think about an america where our companies are leading the world in developing natural gas technology and creating a generation of new energy jobs or the natural gas resources are helping to make our companies more competitive for decades. natural gas burns cleaner than oil does. this is also potentially good for our environment as we make the shift. last april, we issued a challenge to shipping companies like ups. we said, if you upgrade your fleets to run on less oil or no oil at all, we will help you succeed. we want to help you. we started out with five companies that accepted the challenge and of course, ups was
one of the first. that is how they rule. -- roll. [applause] less than a year later, we have 14 companies on board and they represent 1 million vehicles on the road. we should do more. that is why we are here today. first, let's get more of these natural gas vehicles on the road. let's get more of them on the road. the federal fleet of cars is leading by example. it turns out that the federal government has a lot of cars. we buy a lot of cars. we have to help not only the federal government but also local governments upgrade their fleets. as more of these brown trucks
are going green, more city buses should, too. let's offer new tax incentives to help companies buy more clean trucks like these. [applause] ofrd, let's make sure all the new trucks running on natural gas have places to refuel. that is one of the biggest impediments. technology, we know how to do. we know how to make these trucks but if they don't have a place to pull in, we have problems. we are going to keep working with the private sector to develop of 25 natural gas corridors along our highways that have natural gas fueling stations between cities. this is like the ones used by ups.
these are open between los angeles and salt lake city. that is a great start. [applause] now, one of these trucks can go from long beach all the way to solving city and they will be able to refuel along the way. finally, to keep america on the cutting edge, i want my energy secretary to launch a new competition that encourages our brightest scientists and engineers and entrepreneur is to discover new breakthroughs for natural gas. we will keep working on american energy. we will keep boosting american manufacturing. we will keep training our workers for these new jobs. an economy that is built to last also means a renewal of the values that made as who we are -- hard work, fair play, and a shared responsibility.
right now, that means stopping attacks on 160 million working americans at the end of next month. people cannot afford right now losing $40 out of each paycheck. your voices convince congress to extend this middle class tax cut before, i need your help to make sure that they do it again. don't delay. make them get this done for the american people and for our economy as a whole. [applause] we have a longer run issue. how do we get deep fiscal house in order? we will have to make some choices. the reason is that we have these debts and deficits is because we're not making hard choices.
right now, we're supposed to spend nearly one trillion dollars more on what was intended to be a temporary tax cut for the wealthiest 2% of americans. so, let's make it temporary. back in 2001, that is a long time ago. a quarter of all millionaires play a lower tax rates than most american households. warren buffett pays less than his secretary. i know because she was at the state of the union. she told me. that's not fair. that does not make sense. the reason it is important for us to recognize this is if we are going to reduce our deficit, we have to have a balanced approach that has spending cuts.
we have agreed to two trillion dollars worth of spending cuts. i have asked congress for authority to consolidate some of these agencies to make them run better. we will have to be much more effective when it comes to government spending. we are making progress on that front but that alone does not do it. for us to deal with the deficit, we have to look at the other side of the ledger. we -- do we want to keep tax cuts for the wealthiest americans or do we want to invest in things like a strong military, like our children, like our soldiers coming home from iraq and afghanistan. [applause] buffet will, if you make more than a million
dollars a year, you should pay a tax rate of at least 30%. which, is lower than they would have been paying under ronald reagan. no one is talking anything crazy here. on the other hand, if you make less than $250,000 a year, then your taxes should not go up. [applause] i think that that is a fair approach. a lot of folks have been running around saying that is class warfare. asking a billionaire to pay as much as a secretary in taxes is common sense. i promise you, if we make this change, warren buffett will be doing fine, i will be doing fine, scott will be doing fine. we don't need more tax rates.
you are the ones that have seen your wages and your income stalled while the costs of everything from groceries to college to health care has been going up. you are the ones that deserve a break. [applause] we do not begrudge success in america, we aspire to it. we want everyone to succeed. we want everyone to be rich. we want everyone to be working hard, creating new products, new services, creating jobs. that is the american way. we don't shy away from financial success. what we do say is that when this nation has done so much for us, should we be thinking about the country as a whole? when americans talk about folks like me paying their fair share of taxes is not because they
envied the rich. bill gates said he agrees with me, that americans who can't afford it should pay their of -- americans that can afford it should pay their fair share. i promise you, bill gates is the envy the rich. this has nothing to do with an fee, it has everything to do with math. -- this has nothing to do with envy. either this will add to our deficit or someone else will have to make up the difference. seniors will have to pay more for their medicare, a student will have to pay more for their loans, a family that is trying to get by will have to do with less. that is not right. that is not a we are. each of us is only here because
someone somewhere felt a responsibility to each other and to our country and helped to create all of this incredible opportunity that we call the united states of america. now, it is our turn to be responsible and to lead america that is built to last for the next generation. that is our job and we can't do it. we can do it. -- that is our job and we can do it. i have seen this in states like nevada and people like you that i need, you understand. the history of this country, generations of americans working together, looking out for each other. living by the idea that we rise or fall together. those are the values that we have to return to.
i mentioned praise for our military at the state of the union and the incredible work they do. the reason our military is so good is because it's not like everyone in the military agrees on everything. we have democrats in the military, republicans in the military, people are conservative, liberal, different races come religions, backgrounds but they figure out how to focus on the mission. they figure out how to do their jobs. that sense of common purpose is what we will need to build an economy that lasts. if we were together in common purpose, we can build that economy and meet the challenges of our times and we will remind the entire world once again why the united states is the greatest country on earth.
>> is senate hearing on the global economic outlook. in a little more than two hours, at the state of the indian nations address. and from the world economic forum, david cameron on the future of the eurozone and the discussion on the prospects the middle east peace. >> >> our road to the white house coverage continues tomorrow several events in florida. newt gingrich speaks to the hispanic leadership at for conference. the conference in miami will also hear from mitt romney.
the conceit that live here and c-span at 12:20 p.m. eastern. rick santorum also be in miami speaking to the latin builders association. that is live at 1:30. now discussion of the u.s. and global economic outlook. a panel of economists told the senate budget committee they expect modest economic growth this year. they added that the recovery is special. the added that it could lead the u.s. into a recession with little notice. this hearing is a little over two hours. >> i want to welcome everyone to the senate budget committee. i want to start with a bit of the business of the committee, because i know people are asking
what is our intention with respect to going to a marked up. i want to make clear to everyone that i intend to go to a marked up in the committee, and i want to do it sooner rather than later. it talked about march 9 as a time that might have a real estimate. since that time that have talked about that and not let that slip, so we just have to wait and see. i will be talking to all the members of the committee and i want to start that consultation immediately. we will start consultations next week with respect to members of the committee, and will certainly be talking to senator sessions about the timing, and hopefully we will know in the near term what the cbo schedule is with respect to the real estimate.
>> i appreciate that. i know that the chairman deeply cares about these issues, and i think that process will be good for america. >> i do, too. we have some disagreements on some part of what has happened here to fore, and i will talk about little about some of that as well. we also have places where we agree. i think it is good for us as a body and good for the country to have the fullest possible debate. last year in some ways we got overtaken by a separate process, because very early on, and negotiation began at a higher level than ours. that had an effect on what we did. i do want to say that when i hear discussions that we don't have a budget, i don't agree with that.
i just think that is wrong. because when we did the budget control act in august, that provided a budget for this year and next. the budget control act was not the normal way of doing budget, i am the first one to say that. but in many ways, it is a stronger document than a typical budget resolution. typical budget resolution never goes to the president for signature. it is purely a congressional document. the budget control act is actually a law, passed overwhelmingly in the senate, 74-26. not only does it have the force of law, it also set discretionary spending caps for 10 years instead of the one year that you normally have in a budget resolution.
and it provided enforcement mechanisms, including a two-year deeming resolution, which improves the enforcement of budget points of order. something i insisted on in the budget control act. finally, it created a reconciliation like super committee to address entitlements and tax reforms. and it back that process up with a $1.20 trillion sequester. so it is surly different than a typical budget resolution. but we do have the critical elements of the budget in place. i will be the first to say, i would like to see it different than what was adopted in the budget control act. i am sure each of us would have done it differently if we had the power to do. today's hearing, i want to
focus on now, the outlook for the u.s. global economy. we have three excellent witnesses, the former vice chairman of the federal reserve, now professor of economics and public affairs at princeton university. we have the chairman of macroeconomics advisers, one of the most respected macro economic firms in the country, and the director of economic policy at the american action forum. welcome to all of you. thank you for being here. we appreciate very much bigger spending time with us. i would like to briefly review the economic situation confronting the country. it is important to remember the economic crisis that we have come through from 2008 and 2009, we experienced the worst
recession since the great depression. the economy contracted almost 9% in the fourth quarter of 2008. that is really stunning. 9% contraction in the fourth quarter of 2008. we lost 800,000 private-sector jobs in january 2009 alone. the housing market prices was rippling through the economy, with home building and home sales plummeting and record foreclosures. we faced a financial market crisis that threatened to set of global economic collapse. credit markets were largely frozen. we have come a long way since then. the federal response to the crisis, including actions taken by the federal reserve, the bush in ministration, the obama initiation, and congress successfully pulled us back from
the brink. it is clear that our economic situation would be much worse now if we had not had that federal response. one of our witnesses today, along with economist mark zandy, completed a study in 2010 that measured the impact of federal actions on shoring up the economy. their conclusion was as follows. we find its effect on real gdp jobs and inflation are huge, and probably averted what could have been called depression 2.0. when all is said and done, the financial and fiscal policies will have cost taxpayers a substantial sum, but not nearly as much as most had feared and not nearly as much as if policymakers had not acted at all.
if a comprehensive policy response to save the economy from another depression, as we estimate, they were well worth the cost. this chart shows dr. blinder's estimate of the number of jobs we would have had without the federal response. shows we would have had 8 million fewer jobs in the second quarter of 2010 if we had not had the federal response. i understand dr. blinder will present estimates for the number of jobs saved in 2011 as well, which i look forward to hearing. although the recovery has recently shown signs of strengthening, it has been a long and difficult road back. recovery tend to be shallower and take much lower. here is what two leading economists found in their research. "real per-capita gdp growth rates are significantly lower during the decades following a severe financial crisis. in the 10-year window following severe financial crisis, and agglomerates are significantly higher than in the decade that preceded the crisis.
the decade of relative prosperity prior to the fall was importantly field by expansion in credit and rising leverage that spans about 10 years. it is followed by a lengthy period of retrenchment that most often only begins after the crisis and last almost as long as the credit surge." in other words, we should expect to see more than normal growth and relatively higher unemployment right now, because we are recovering from a severe financial crisis. if we look a private-sector job growth, we see it has improved dramatically from one we were in recession. as i noted in january 2009, the economy lost more than 800,000 private-sector jobs to private sector job growth returned in march 2010 and we now have 22 consecutive months of growth. some additional positive signs
that we see in the economy, as i mentioned before, we have had 22 consecutive months of private sector job growth. last week, unemployment claims fell to their lowest level since april 2008. we have seen nine consecutive quarters of real gdp growth. gdp growth is not expected to have risen to 3.1% in the fourth quarter of 2011. housing starts are up 25% since december 2010. consumer confidence was up sharply in the last two months of 2011.
u.s. auto manufacturers are returning to profitability, and state revenues are showing signs of improvement. but those with news elements are no reason for complacency. there are serious risks that remain to economic recovery. for example, unemployment and underemployment remain far too high. housing continues to pose a threat. too many homes are still in foreclosure or underwater. political deadlock in washington could block key measures. federal, state, and local budget cuts could add too much near-term fiscal drag. the european debt and fiscal crisis is creating uncertainty and threatening u.s. exports. as was reported on the front page of the washington post yesterday. i hope all our colleagues read the story about what has happened with the slowdown in europe and how that is affecting u.s. companies as well. beyond that, we have what i have termed our own debt threat. we have a debt that is too high, growing too fast, and his comparative that we present a plan to deal with it. i was part of the fiscal
commission, part of a group of six. in both the above effort, we came up with plans to reduce debt by $4 trillion over what would otherwise occur. i personally favor a more ambitious effort than that. my fondest wish would be that we could come together around a plan that would reduce the debt from what otherwise will occur by about $5.50 trillion. why do i put that number? because we could balance the budget in 10 years if we put in place a plan of that magnitude. the timing of when it begins is critical, because the economy is still weak. i would not personally start tough medicine until we see the economy doing better, but i would put in place a plan right now to achieve the kind of debt reductions that i have described.
i believe that would be a tonic for confidence in the economy. i believe it would assure markets that were serious about the fiscal affairs of our country appeared with that, i am going to stop. i apologize for the length of that opening statement, but there was a lot to talk about. senator sessions, welcome back. >> i agree with you that a plan now is needed. i do believe that it would, in fact, provide a tonic, as you say, confidence in our business world and the world around that we have our house in order. one of the things that is destabilizing our return to growth, or weakening that, is
lack of confidence that we have our house in order and we have a plan that would bring our house back into order, and balancing the budget in 10 years would be really good goal. i believe we could do it, but it would not be easy, as you know. we are entering the budget season for fiscal year 2013, producing a budget for public accountability and scrutiny. it represents one of the bonneville duties of a good government. particularly in a time of economic stress. the last time the chamber offered and present to the floor of budget in 2009. i believe that is 1002 days ago. i appreciate your call comments,
your expressed a desire to work on a budget resolution, and i look forward to working with you in a realistic way, but it is not going to be easy to lay out a plan that works. for too long, washington has been spending what we do not have, borrowing what we are not able to pay back. it has become a habit, a trend. our debt is now greater than our entire gross domestic product. slowing down road today and casting a shadow of doubt on our economic future. i believe it is impacting growth today. we would have higher growth today if we didn't have as much debt as we have. americans were promised that a surge in spending would lead to a corresponding job creation. maybe there has been some help
there, certainly the amount of money that has been spent certainly in the short run should have provided some help. but i would just point out, our job situation is not good. the number of people working today, 131.9 million, is less than in 200. that was 132.5 million. we had more people working in the year 2000 than we have today. the number of people on unemployment compensation is one thing for valuable insight, but it is not the only thing. we are not creating sufficient jobs. i saw one of the french ministers this morning on bbc saying they believe have to get their debt under control, but most important, make the french economy productive and growing. the middle class is being squeezed from all directions.
real wages are declining. it is not a winning combination we are you are not adding real numbers of jobs and not having real income. declining food and energy prices are rising. job prospects remain scarce. health expenditures, which we hoped and were told would go down, are going to be by the end of this year up for a family of four by $200 a month. $2400 according to the cbo. what makes matters worse is that the growth we have seen has been too much driven by an sustain borrowing by the government. this is not a solid foundation, in my view. the cbo one said, for instance, that the president's first stimulus package -- and they accounted for this carefully -- ultimately would be a net drag on the economy. yes, they said you would have a short-term benefit, but that stimulus is now gone. the money is spent. the benefit, short term, is now gone, but we are carrying the
burden of that debt still. so we are adopting policies that are leaving us weaker, not stronger in the long run. in the state of the union tuesday, president obama had a chance to tell the american people the truth about the danger we face. he missed perhaps his last opportunity to rouse the american people to make some tough decisions that will feel tough, but will not require us to salvage this government spending. i was discouraged about how little the president spoke of our mounting fiscal obligations. the super committee finally agreed -- as you know, only $2 trillion of production deficits, instead of the $4 trillion we have been told repeatedly is the absolute minimum. you have said you would like to
see more. we will spend $45 trillion in the next 10 years, and we will add $12.40 trillion to the gross debt, so i do not think a $4 trillion reduction in the expected growth of debt is too much to ask. i really do not. the president outlined no plan to go beyond that $2.4 million. the money we were borrowing to fund the war -- we were hoping to reduce that amount of borrowing and stop increasing the debt by bringing the war costs down, and now, he proposes expanding at least half of that on new programs. so that is a concern. we hear the argument that spending cuts should be
deferred, but this, i think, goes against common sense, and really more, the political reality. the american people are ready to hear the truth and willing to take some action. we have economists who say cutting spending now would be the perfect time, you should next june cut taxes by a certain amount, but this is a political world. we are not able to make decisions like that. we have to move when we have the consensus to move, and i am really trouble that we might lose the consensus we have to make some really good changes that i thought the last election led us to. mr. chairman, i would offer more of my remarks for the record, but i would just say we should focus on solid policies, creating jobs without adding to debt wherever possible. more growth, more jobs without more debt.
that means more domestic energy exploration, american energy. a streamlined tax code focus on growth. more free market competition in health care, not more government domination. immigration policy that spurred national interest and legitimately protect our american workers. it means making the government leader itself and more productive. that would make america stronger and healthier. the president says he wants america built to last, but we cannot do that on borrowed money. debt is not an asset. spending is not the virtue. borrowing cannot be our future. thank you. >> i thank the senator. i just want to say there are
places where we disagree, and we are going to have a really good debate in this committee and hopefully, we will have a really good debate on the floor of the senate. but while there are places where we disagree, there are places where we are in strong agreement. especially in place where i see we are in strong agreement is the need for a substantial plan to deal with the debt over this next 10 years. you know, if we could find a way to come together in this committee -- i have been here 25 years. i am not operating under any illusions. this is an election year. but i do believe if we could find a way to come together around this committee, that itself would be a boost to
confidence in the country. so let's try. you have my commitment. i am eager, and this is the last year i will be here. i am not burdened with a reelection campaign. i will spend every possible moment focused on trying to achieve a result. i ask all members -- you know, i know it is hard. we have all taken positions, things we feel strongly about, but if none of us are willing to give any ground, we are not going to succeed. it is going to take all of us to give some ground on things we hold dear to find a way to come together. i have sat on both sides, and i plead with colleagues -- let's give it our absolute best shot. i pledged to do that.
them a while you have taken action, you have said we are going forward. you have made a decision to go forward with the budget process, and that is real action. i think that as a good first step. thank you. >> thank you. we will go to our witnesses and go right on the table. what have we said? seven minutes. if we try to hold to that, full testimony be made part of the record, and then we will open the panel up to questions. thank you very much for being here. i appreciate it. >> chairman conrad, ranking member sessions, members of the committee, i would like to thank you for the opportunity to share my views on the budget today. i think even in this fractious environment, everyone agrees
that the recovery has been far too weak. the numbers we have now show a compound growth rate since the recession ended up only 2.4%. that is a rate we could be satisfied with it we started at 5% unemployment. some observers view this week macro economic performance as unsurprising and maybe even inevitable, given the devastating financial crisis that brought about the recession. you mentioned the analysis, which is just the celebrated, showing that it takes a very long time for economies to recover from banking and financial crises, but what was pointed out in a very nice paper recently by three researchers at the fed is that the extraordinarily poor performance over a decade is not
so much from the slow recoveries after the bottom, it is that the bottom is so deep. it just takes a very long time to climb out. that should be a lesson for all of us. it means we are not condemned to a sluggish recovery in terms of growth rate, much less one that never gets us back to full employment, as you hear some people claiming. there are many factors relative to the speed of vendor recovery, including both macro economic policy and luck. i want to start with the first and finish with the second. it would be nice to have a little luck. the u.s. policy response to the devastating recession was vigorous, as you said, mr. chairman, but it is petering out, as you also said. the fed deserves a lot of kudos for what it has done, but i want to focus on congressional
action. i realize that for many members, voting for tarp in 2008 was about as much fun as a root canal work, but i have little doubt that history will record that that vote, the vote for the recovery act in february 2009, followed then by the very successful banks stress tests that spring, which required the tarp money behind them to be effective, really turned the tide, and making a horrific situation merely terrible. it is a hard point to make, right? we wound up at a terrible point. it could have been much, much worse. in the paper that you mentioned, mr. chairman, we use a large scale model of the u.s. economy. to estimate the overall impact of all of these policy responses taken together on the economy. i think, as far as i know, it is the only such estimate to the state. there are many such estimate to the effects of the recovery act, for example, but there were many things done in the financial arena.
we estimated that all those policy responses together added 10 million jobs in 2011 and 2012. it is roughly the same number for 2011 and 2012. if you translate that to the unemployment rate, it is roughly 6.5%. instead of 8.5%, we would be at 15%. maybe that is wrong, but if it is even close to the ballpark, that is an unthinkably bad outcome that we avoided. spending from turkey, of course, is long gone, and spending from the recovery act peaked in 2009 and has been declining ever since. in 2011, that amounted to roughly 1% of gdp. in fiscal 2012, a two will be perhaps half that amount. correspondingly, if you look at the federal spending component of gdp, it has been falling since third quarter of 2010. this comes to the point about
the near-term fiscal drag that you mentioned in your opening statement. i published an op-ed in the "wall street journal" a week ago describing what i called four myths about the budget deficit. i will not go over all four now. one was that we had an urgent deficit problem that had to be tackled right away so that we do not become the next greece. that has as a corollary the notion that if there's any fiscal stimulus efforts, pay for it immediately if not sooner last we spoke the market. the markets are practically falling over themselves to lend money to the federal government,
the united states federal government, not to some other federal government, at negative real interest rates. i suggest the as an example, a package that would spend another $500 billion in the near term and pay for it 10 times over with $5 trillion worth of deficit reduction. i would support that kind of policy if you changed the 5286, the four to three -- almost any number. a second, which i know comes straight from your legal mandate to deal with 10-year budget windows, is the obsession on the next 10 years. if you look at the cbo long-term projections, what happens over the next five years is actually quite benign and what happens over the next 10 does not matter very much. it is after that that things explode entirely out of control, almost completely do health care spending. so that is the issue. finally in the last minutes i see on the clock, the luck issue. my outlook for gdp growth in
calendar year 2012 is about 2.5%, the st. tepid pace we have been experiencing since the recession, and the biggest threat on the economy -- financial contagion from europe. the latest news on that in the last few days or week or so is pretty good, but it turns good and turns bad and we cannot count on that. it could change any day. we get a worst-case scenario, a european financial blow that will be somewhat like lehman brothers -- not exactly like lehman brothers. -- almost all of that growth could evaporate. the other major risk, which i cannot begin to calculate, comes from the middle east and oil. so far, that looks ok, but who knows what might happen there? some might say the near-term outlook for the economy is mediocrity if we are lucky and stagnation if we are not, and i would have helped that the united states of america had higher aspirations than that, and i would also hope that this policy would help, not hinder, this recovery.
thank you very much for listening. i'll be happy to answer any questions. >> thank you very much. then the chairman, distinguished members of the committee, i am the senior managing director of macro economic of buzzers, a forecasting firm in st. louis that i founded in 1982. thank you for inviting me to discuss the risk around the u.s. and global economic outlook for the u.s. and what policy might do to improve it. our outlook for 2012 was dark. we see the nation's gdp growing only about 2.25%. this is not fast enough to help the unemployment rate. unemployment could drift up modestly from here over the
next 12 months. given that much slack in labor and product markets, inflation will remain subdued. consumer prices likely will rise only about 1.5% over the course of the year, but with unemployment that are above the benchmark and inflation below the 2%, monetary policy will remain accommodative and interest rates historic low. consumer spending will grow at about the same pace of gdp. private domestic investment will grow somewhat faster. a narrowing trade deficit will be a modest boost to growth, but fiscal policy will restrain the recovery. it has three components. first, the stimulus associated with the american recovery and reinvestment act of 2009 is abating. second, the caps on discretionary spending passed as part of budgetary control at of 2011 will start to bite.
third, state and local governments will continue to trim spending and boost taxes in order to comply with their balanced budget mandates. where are we in the deleveraging process that all of us are concerned with? at least at the aggregate level, there are indications that in the united states, we are nearing the first stage of the deleveraging process. corporations -- at least large corporations -- are flush with funds and balance sheets. house prices have fallen back into historical alignment with incomes in rent, and thanks to consumer retrenchment and very low interest rates, the ratio of household debt service has retreated to very low levels. a sizable percentage of homeowners remain under water on their mortgages, and there can be little doubt this is both
a drag on consumer spending, the housing rebound, as well as an impediment to labor mobility that contributes to high structural unemployment. the deleveraging process is only secondary, now coming more forcefully into play as the economy continues to expand. credit strings have tightened were qualifying credit scores linger well above recent norms. federal regulations intended to define and curtailed systemic risk are now under development. all the secondary dimensions of the deleveraging process might safeguard the economy and improve the quality of expansion, but they also do restrain the pace of their recovery. in my 30 years in this business, i have never known as much uncertainty to surround our
forecast as as the case today. i want to discuss briefly with you the risk and uncertainty that a critical to have the environment may evolve over the next several years, areas about which i think many economists actually agree, although there could be some reasonable disagreement on some of these bonds. first, let me address fiscal policy. we prepare our forecast using an economic model that allows us to make their explicit assumptions about fiscal policy. this was a lot easier in the old days. changes in the governing mandatory benefit, changes in tax cut and changes in discretionary spending were relatively infrequent and usually considered permanent in nature. now, the fiscal landscape is cluttered with temporary policies, extensions, modifications which could have measurable impact on our forecast. i do not know how all these things are going to play out. i would be suspicious of any forecast to the claims he or she does. to give you a sense of the challenge, our forecast assumes the payroll tax holiday benefits will be extended through december but will be paid for
gradually through the next decade, the health care reform will not be repealed, that most of the bush tax cuts will be extended, that it will sequester will be avoided, and the grand bargain on a gradual deficit reduction will be achieved. a lot of assumptions. however, imagine the enormous fiscal drag in 2013 -- roughly 5% of gdp -- should either by political design or political miscalculation the tax holiday, unemployment benefits, the doc vix, the bush tax cuts all expire even as the health care taxes take hold and discretionary spending is sequestered. furthermore, all that could happen in a sputtering economy when the fed, having already expired most of the errors in its monetary quiver, could not respond aggressively or might be politically restrained from spawning at all. in our modeling, that is a recipe for recession. i want to talk about the euro crisis. the view of the slow-motion train wreck that is a view of the debt crisis as a single
downside risk to continue economic recovery in the end of the states. slower growth in the eurozone mean slower growth in the u.s. export region, which makes goods and services produced in the u.s. less competitive, but more important would be the financial contagion that could spread around the globe without regard to borders if an uncontrolled lehman brothers event occurs within the financial system this year. prices of risky assets around the world declined together even as the dollar strengthened. it could tip the u.s. into the back end of a double-dip recession, and this does not even consider the possibility of a dissolution, either in part or in full of the euro itself. house prices, my last point -- the issue here is that home buyers and home builders delay buying and building if the expectations for further declines in house prices.
the consensus forecast is for house prices to begin rising modestly, which would be good news here rising rather than falling house prices will lower real inflation, just a cost of mortgage finance, thereby supporting housing demand. may also boost household net worth, prevent foreclosures, thereby supporting consumer spending. unfortunately, it is difficult to be confident in the consensus forecast for house prices here for one thing, not long ago, the consensus was for house prices to turn up last year. for another, no one knows for sure how long is the shadows by of houses that could be brought to market the moment sellers since prices bottoming out, therefore delaying even longer the eventual turnaround in housing prices here as the economy approaches the three- year mark of this recovery, the coming years are likely to see growth and utilization rates that will not especially surprising given the circumstances, will nonetheless feel and be very disappointing. furthermore, the risk of the forecast and the uncertainty surrounding them have seldom if ever been as dire or prevalent as they are now. in short, these will be very
trying times. you can call me a cockeyed optimist because at least from my point, i can imagine worse outcomes than the ones i do consider most likely, but i surely hope not to see them. thank you for your kind attention today and the opportunity to offer my advice. >> thank you, dr. prakken. >> thank you for the invitation. as someone who worked on the hill for nearly a decade, as an economist, when my jobs was to -- and for members of the economic forecast, i just want to give the warning that it is really difficult to do economic forecast. i always tried to caution my bosses not to put too much faith in them, and not to denigrate dr. prakken, who has by all accounts the best forecast out there, this is just an impossible thing to do. the look of forecasts the way they work, generally people forecast next quarter something close to what this quarter is,
and the one after is a combination of long-term growth than what it was last quarter and three quarters up, it is more or less what they think long-term growth is. this is not really a science and it is subject to all kinds of contingencies that might happen. i think right now, if you look at what is going on out there, there are a lot of risks to the economy. i think dr. blinder identified this -- who knows what will happen in the middle east or with oil prices? as everyone who has spoken here has indicated, what happens in europe is the real wild card. there have been a few articles in the last few weeks. the "washington post" article refuted that -- the eddied where somehow there is a linkage there, that somehow we are immune from what might happen in europe. i did not think that is the case of all. i think in increasingly globalized society, we are very much at risk.
and the idea that this might somehow benefit us because it capital flight leaves europe and is looking for another place, it might come here -- that might be true in the short run, but i take a little bit of exception to dr. blinder -- i do not think if we are going to run trillion-dollar deficits for the indefinite future -- i think at some point, that is going to start spooking markets appeared especially, as he indicated, if we have an entitlement that is growing and growing and growing and there has not been any real movement to do anything about it. i am not a big fan of fiscal policy. i think it is an interesting and fun game to play -- "what if we had not made certain changes in 2009? what would have been the impact?" i do not think the government is going to be nimble enough to enact fiscal policy in a way that benefits the economy. an example i like to the people has to do with it a favorite restaurant i have in washington, d.c., a deli located for 30 years at 15th and i street.
in early 2010, the building was remodeled, in the ground-floor tenants were booted out. 2012, the work still has not begun. over 100 people who work at these ground-floor businesses ended up losing their jobs. a year later, it eventually found a new place to work, but government does think very slowly. it is the nature of the beast. we simply cannot count on if there is some kind of new recession out there, caused perhaps by the euro crisis -- we cannot count on the government to nimbly respond to this with fiscal policy. as both my counterparts have noted, the federal reserve does not have too many quiver's left to deal with the current crisis we have.
it is almost impossible to see how they can -- they certainly cannot lower interest rates further. it is difficult to see what else they can do. what i would like to encourage the senators to think about -- instead of thinking about the very short run policies we can do to stimulate the economy for the second or third or fourth quarter, just to think longer term and think what we can do to engender long run economic growth. the two i think are most obvious are things that have been cited before -- i think it is time to have entitlement reform occur. i think the simpson-bowles committee made an admirable first attempt, and i think that would have been a wonderful place to begin. the gang of six also talked about this. again, great place to start the discussion. i wish members of both sides would have picked that up and run with it.
as the chairman said, it is a really difficult time to something like this, during an election year, but it seems to me that waiting one more year is something that we really cannot afford at this time. for a number of reasons -- not only our health care costs rising, but another good thing that is happening that also happens to have a bad outcome is that longevity is increasing dramatically, especially from age 65 on. it is kind of interesting. if you look at the centers of disease control data from 2000 through 2007, longevity increase for people at age 65 by nearly a year over those seven years. if longevity is going up for people who fit the retirement age by nearly two months a year, that will overwhelm our system. that is something that social security and other actuaries have not been able to account for yet. this is kind of one negtive surprise from something the other was is a very good trend.
it really is beyond time to have a tax code that looks like somebody designed it on purpose. as a former treasury secretary said so nimbly. we do not do a very good job at encouraging investment. we do not do a very good job at encouraging all kinds of things. just the complications that are endemic of the tax code are something that need to be fixed. to me, it seems like it is obvious that there is a bipartisan solution that could keep rates relatively low -- get rid of a lot of exemptions, things like the mortgage interest deductions, something i have written about credit, and end up with more revenue and more reasonable rates, and something that actually encourages economic growth rather than discourages economic growth.
seems like it, reform and tax reform are two gigantic things. i know it is difficult for congress sometimes to do more than one thing at a time, but it seems like it is a propitious time for the u.s. senate to bite off as much as it possibly can. thank you. >> thank you, dr. brannon, for your references to the fiscal commission and the group of six and your references to the need of tax reform. i used to be a tax commissioner, used to the chair of the multi-state tax commission. for anyone intimately familiar with the tax code, as i know you are, we are way past time to fundamentally reform it. it is an abomination. if you were going to sit down and design a tax code that would have the worst disincentives to the very things we all want to see happen -- savings, investment, economic growth -- you would be hard
pressed to do a worse job. i am going to defer my question in time. then we will go to senator sessions and proceed with other members. i will reserve my time. >> mr. chairman, thank you very much, and let me thank all three of our witnesses. i found the testimony to be very persuasive, that we had not taken action -- decisive action -- that today, we would be faced with unemployment rates that are much higher and options that are much fewer. i also take away from this, mr. chairman, from the testimony that has been given, that we do not extend the unemployment insurance programs, if we do not deal with the payroll tax issue, if we do not deal with amt, if we do not deal with the
physician problems in medicare, that we are going to put a real anchor on our recovery and cost employment. our unemployment rates will go up. we have a short-term/long-term issue here. i just want to associate myself with the comments of the chairman and the ranking member, that we need a deficit reduction plan over the next 10 years that, as a minimum, reduces the deficit by $4 trillion. i agree with that. but in the short term, we have got to take steps to counter some of the challenges to our economy. our state and local governments will be reducing their input into the economy. that is for sure. they have no choice. they really are relying on the federal government to provide some assistance to our economy. we have got to figure out a way to do that consistent with the long term commitment to reduce
our debt. that is what we really need to do. i will ask the question, if i might, as it relates to the housing market. you all touched upon this somewhat briefly. we all know that it was the housing bubble that burst that sparked the current recession -- it was not the cause of the current recession, but it was certainly a spark. the two of you have commented on it directly, but we may not yet be at the bottom. we hope we are. we hope we will see housing prices increase. what can we do at the federal government for policy that would be helpful to encourage a more healthy housing market? we know that there is a lot of inventory that is potentially out there. people have been sitting on the sidelines. we also know that mortgage
rates are historically low. what can we do to try to encourage irresponsible return in the housing market that will help not only housing sales but also new home starts? >> that start on that? >> certainly. >> i will not start with pie in the sky with congress appropriating huge sums of money to help these people that are under water in the mortgages, which in an ideal world, i would. in 2008, advocated that, but it is not going to happen. there is something much simpler, which i would hope that republicans and democrats can agree on -- when the law in 2008 establishing the fhfa was passed, it provided for conservatorship of fannie and freddie it's the worst happen. the worst did happen, and fannie and freddie are now in conservatorship. conservatorship perpetrates the fiction that there are shareholders out there whose interests need to be protected,
that we are considering value. the head of the fhfa -- who, by the way, has never been confirmed, so he is acting, which is another issue -- is under a legal mandate from congress to conserve value. the truth is, as we all know, that fannie and freddie our nationalized companies, basically, and the only shareholders that matter are the u.s. taxpayer, and that law should be rewritten. i do not think it would take more than a one-paragraph bill to put it into the wall, that their job in taking care of the red which will eventually be the demise of fannie and freddie -- there one objective should be to serve the citizens of the united states. i think that would help. >> a number of things, but we should, i think, start by saying there is no silver bullet that can fix the housing mess. it will, under all circumstances, be a long and drawn-out affair.
but i think we can agree that to date, the program is intended to facilitate mortgage modification and refinancing has had disappointing take up rates. i think this disappointing rates are partly because of reservations on the lenders side to participate in these. so schemes that somehow broaden the number of mortgages that qualified for these plans perhaps coupled with some approach to sharing future house price appreciation with the lenders could encourage them to become more actively involved -- i know you have written about this -- and they are also extremely worried about having the so-called representations' of mortgages put back to them in the event that they jump back into the refinancing game. a better attempt to modify
mortgages without actual debt forgiveness, which i think -- >> just let me interrupt for a moment. it is a major issue in my state of maryland. i've had many housing forms, and i have one again this saturday not far from here. there is an inconsistency among banking institutions. some are very happy to try to work things out because they understand it. others are very remote, and he cannot seem to get their attention. is there any way we can get the attention of the mortgage holders in a more direct way?
but my great-aunt added, if you really know indians, you really know what they don't say is sometimes more important than what they do say. and when he gave that eloquent speech and he recognized the changing reality of the world in which he lived, he did not say he would give up who he was or who his tribe was or his languages or his traditions, he intended to keep those within the greater whole that he was now becoming part of. that's who we are. we're the oldest part of america, the most remarkable part of america, actually the most diverse part of america,
but each and every person in here who's a member of a tribe intends to remain who you are. and to retain and pass on that identity, your culture, your traditions, but, yes, your unique political status within the constitution of the united states. each generation of american indians usually has to educate the rest of the country about what that status is, who we are and who we intend to be. our navajo brethren have a real story, a phrase they use, and i'm going take a little liberty with it, the long walk, one of the great tragedies they went through as a people. but we ought to remember when we think about the long walk, it's a little bit different that a lot of traditions in oklahoma, like the cherokees with the trail of tears or chickasaws with their forced removal or so many of our tribes, the long walk, if you know the history, as most everybody in this room does, is
a two-way walk. it's a long walk away, but there's a long walk back home, too. we're engaged as native americans in a very long walk, the longest walk in american history. much of it is a walk away from who we were. sometimes forced relocation, sometimes forced assimilation, sometimes forced efforts to literally eliminate tribal governments all together. we're now, i think, at the turning point and at the long walk back, the long walk back home, the long walk back to retaining our sovereignty, retaining our identity, and retaining and celebrating the unique contribution that each and every indian nation makes to this wonderful nation that we all call the united states of america. thank you very much.
and now you all know why we're so proud of our enrolled chickasaw member of congress and his profound words that he shared with us today. today we also are honored to be able to be joined by two other members of congress that give us a good example of this bipartisan effort to really come together. so i want to introduce and to recognize today, we have the chairman of the senate committee in indian affairs. he's a native hawaiian. he's brought the spirit of cultural protections, of the importance of some of the values of our language programs, and, of course, the hope and the opportunities to come forward as part of his championship in the senate committee, and he's joined today by vice chairman, the
senator from wyoming, who is, many among things, in his support for indian country, is really championing the energy bill and moving forward that the energy bill, which we think is going to be another great economic opportunity for all of indian country. if either one of you would like to say a few words, we'd be glad to have you both come here, standing together like you do in the committee. thank you. >> aloha. >> it is a pleasure to be with you here today and to hear the president's assessment of the state of the indian nations and
outline tribal priorities for the coming year. it is important for all native american communities, be they american indian, alaska native, or even native hawaiian to take stock of where they are. and set achievable goals for the coming year. and this time when government, having to do more with less, we must endeavor to strengthen the ability of tribal governments to develop their local economies, spur job creation, and meet the needs of their people. as chairman of the senate committee on indian affairs, i
am committed to reminding my colleagues about our trust responsibility and the promises made to tribal nations and working to protect the federal program and services that are mandatory to meeting that responsibility. vice chairman and i continue to lead the committee in a bipartisan manner, to resolve ambiguity and federal law regarding the rights of native communities and the jurisdiction of their governments. we look to advance native solutions to native native concerns.
and this congress, the committee has held numerous hearings, round tables, and listening sessions, because i believe in hearing from the stakeholders as we do important work impacting indian country. native communities are innovative in their approaches to self-sufficiency, but they're in energy, economic development and education. they are demonstrating the class state to meet the needs of the communities. and we must remove barriers to their work. in keeping with the federal policy of self-determination and self-governance, the committee will continue to build the record on issues vital to native peoples. the unique identities and importance of the homeland.
we'll work with you to build the foundation for a new era in the government-to-government relationship. you also have a strong partner in the obama administration, in assistant secretary. as many of you know, my two top priorities of the fix legislation and the native hawaiian government reorganization act. both are vital to ensuring parity in federal law and resolving ambiguities in america's relationship with its first peoples.
the bill clarifies the secretary of the interior's ability to take lands into trust for all tribes. an authority that the secretary has exercised for more than 75 years. they've created instability in native and rural communities across the country. and in legislative over 100,000 jobs for american workers and significantly improves law enforcement on and near reservations. we are seeing new legal challenges to the status of indian lands. these kinds of lawsuits cost money.
and that is better spent meeting the needs of native peoples. this issue has bipartisan support, and i extend my law to my good friend, tom cole, for his leadership on this issue. almost 120 years ago, the united states aided in the illegal overthrow of the kingdom of hawaii. depriving native hawaiians of traditional government. shortly thereafter, the congress began exercises its indian affairs powers to address native hawaiian conditions and has done so in over 150 laws.
the suppression of their right to self-determination was enacted. native hawaiians have waited too long for justice. it is time to make things right and pass my bill. under my direction, the committee will continue to advance several other important bills. the native class act empowers native communities to implement strategies that produce strong educational outcomes for the the children. the save native women act ensures that tribes have the authority and resources to address issues of violence against women.
as a native hawaiian working with others, doing things with aloha and right and just is the cornerstone of who i am. my proof is being who we are as native peoples is effective in washington, d.c. i do encourage tribal nations to participate in the process, meet with my committee staff to share your concerns and solutions and to continue to move forward together.
and by coming together and working together, we can bring it about. i look forward to working with you all on your priorities. i want to thank you forgiving me this opportunity to make these remarks. god bless you, god bless your families, god bless the indians and the alaskans, and god bless the united states of america. [applause]
>> i wanted to stand here today with our chairman to show how we want to continue to work together in a bipartisan way, and we will continue to do that on behalf of the indian people. thank you, mr. chairman. i wanted to be here to press my appreciation, my administration, and my respect. i'm so grateful to be here with you and representative cole's statements are absolutely right. flexibility and authority, and i want to thank you for sharing those wonderful stories and the history of your family, as well as your great-aunt's story. those are lessons that we should and can never forget.
they are critical to all of us. listen very closely to the remarks, and to me, it all comes down to the real headline. it's tear down the barriers to success. and you continue to face those barriers to success. it's remove the obstacles, and that's what we are going to continue to do, as we work to remove the obstacles that stand in the way of economic success, of jobs, of healthcare, of education, and a better way of life. so i just wanted to be here to share with my chairman and representative cole all of our concerns, as well as our good wishes, so thank you so much for letting me be with you today. >> thank you again to our members of congress for joining
us today. we know you have busy schedules, but we are honored by your presence. at this time we'd like to open you are fezz. we'll start by opening up questions to our press, and then we'll go to open it up to questions of other folks. we do have people online. we have over 500 sites watching live right now, as well as the taping that will happen on c-span's taping, and others are taping, so we will be taking questions online via the ipad. so at this point, any questions? please state who you are and who you represent. we do have microphones. thank you. >> do you think that allows tribes, especial medical bills that have lingered in the senate, do you think that kind of opens the door for some of these bills because there is
such bipartisan agreement on them to become top priorities for this congress? >> i certainly hope so. i think, as you mentioned the partisan gridlock, i think the partisan gridlock is not because of the bills that affect indian people. as we said earlier, congress has found common ground on those issues that affect indian. on indian policy, i think you see across both aisles support for those programs. i don't know what the outcome will be in some of these bills, getting them passed, but certainly we are encouraged by the bipartisan support for all of those bills, and we thank you. thank you for that question. >> good morning. i'm with the native news network. yesterday the u.s. census bureau released figures, 78% of american indians live off or
away from tribal land. what can be done to make sure our indians who are living in urban settings and rural settings can benefit, because so much of the money goes directly to tribes. >> that's an interesting question, and thank you for that. we do realize that the urban indian population, populations of indian people in the urban areas are growing. it's growing. many of our people have left, and moving to urban areas because of a lack of job opportunities, lack of programs and lack of access to those opportunities in and around our local communities. but the tribal governments themselves are looking at opportunities to assist those tribal members. it's very difficult at times, particularly in those areas where the dollars are limited, and because federal dollars are appropriated and are utilized
by those that are benefited within that local community. and so, i know that ncai and some of our partner organizations have looked at how we can help those people in those urban areas, particularly in the healthcare arena. we have some urban healthcare centers that provide healthcare and access to healthcare for those who reside in those areas. but those are limited. we don't have those in all of the areas that we need. we simply have a few, a handful of those healthcare centers. we need more. it's a very difficult question and one that we continue to work on. jackie, would you want to answer? >> i want to add one thing to that. first of all, yesterday was a great day when they released that report at the museum on the native american museum, and we are pleased to have our staff be part of that. but look at the map that is in the press release and the report. if you look at the maps, the concentration of natives is
actually really close and adjacent to native communities. so, even though we do have a large spread of what we would call urban indians, there's the highest concentrations that are really adjacent to the tribal communities. next question, any other press with questions? yes? >> i was just wondering how the president's state of the union was the other day, and he did mention the 24,000 native americans that are in the armed forces. however, he failed to mention much more about the native american community. what is your response to that, especially because, as you said, you are the first americans. >> thank you. obviously we'd like a lot more exposure. we'd like a lot more comments from the president about the native communities and the policies that affect our citizens. but i think the state of the nation addressed by the
president was directed more to congress. i think his priorities was looking further and was more broad in the context of the nation as a whole and not necessarily focused on native america. a few months ago, a month or so ago, there were tribal leaders at the tribal nation summit that was held here in washington, d.c. in december. tribal leaders -- 12 tribal leaders were able to sit in and meet with the president one-on-one, one afternoon. and many of those tribal leaders -- in fact, all those tribal leaders that were there, i happened to be honored to be part of that. we did direct questions to the president, and we asked him for specific areas of support. and obviously the time was limited.
we do expect -- in the future, we asked for additional meetings with the president, not just a one-time meeting once a year, but these meetings with the cabinet secretary, those are the people who really affect the indian programs and the services that are provided to native americans. but we asked for that, and we asked for support. we asked for meetings with the office of management and budget and other high-level agencies. that's where really we need to be concentrated. so you would love to hear the president and talk about native americans, but it's up to tribal leaders to continue to ask for access to the white house and access to him. i have to say, the president -- this president, president obama has -- he made some commitments to indian country during his campaign when he was running for president. he's kept his word. he has placed people in strategic, important positions within his administration, and
they're doing a tremendous job. but it's limited. again, access is limited, and we need to expand that. we need broader support. thank you. >> in the president's message, a lot of it he talked about, he was trying to address the economic security of this country, but about program flexibility. if you heard president keel's speech today, we're asking the same thing the president was speaking about in his address two days ago am we actually have developed a report at ncai that we shared with the white house. we've had meetings with the white house to talk about some of those areas, specific areas of program flexibility. we're hoping we'll be part of his -- part of the work that they're doing within the administration, targeting those areas where, without a lot of new money, but with a little bit more government flexibility, our programs will be more efficient.
>> i'm with the national museum of american indian. also in yesterday's release of the census figures, a very high percentage of american indians are under the age of 24. what would be your suggestions to all of indian country on how we can mobilize the indian vote for the age brackets between 18 and 24? >> well, i'm going to ask jackie to talk about the get out the everybody in a vote, because we do have a concentrated effort to get out the native vote this coming year. it is important that we mobilize our young people, not just the first-time voters, but that's an important segment, but all of our native citizens in all of our communities to get out, get registered and vote. when we look at how many were not even registered four years ago during the presidential election, almost a million people were not registered to vote. that's a significant piece of
leverage to use in these native elections. so it's important that we not only talk about getting out the native vote, but we concentrate our efforts on how to do that. i know jackie's worked extremely hard, and her staff and our sister agencies have worked hard to do that, so i'm go to ask her to address what we're doing specifically in particularly these large indian population areas. >> great. we have a plan. go to nativevote.org. you'll see our plan. we have a campaign for the year targeting our tribal leaders. we've asked every tribe to have a native vote coordinator. we have monthly trainings and teleconferences for those coordinators, whether it be for the tribe, the state, the region, the organizations. we met with all the nonprofits, native nonprofits on monday and talked to them about what we can do and what they can't do regarding supporting our native vote efforts. we met with the regional tribal
associations last friday and talked to them about what we can do as far as trainings and their communities. we partnered with rock the vote and other areas to build within their civic curriculum. we will have a native curriculum that will supplement them for schools with high populations of native students, and we have a whole native youth vote campaign that's going on in addition to the regular. nativevote.org, you'll learn about it, thanks. >> i want to add one area, and that is, i wanted to thank the members of congress that have come here today. i want to thank congressman cole for his remarks. i know that their time is critical. but when we talk about people who support indian issues, who are supported, not just because they're required to -- not just because they have constituents within their legislative
districts, but because they understand what it really means. that's what we need in indian country. we need the native vote to get out and talk to those candidates, find out who and what they are, where they come from, do they support our programs. and if they do, let's support them, let's help them. that's what we need to do in the native vote, but it's more than just talking about it. we need to organize and mobilize them. thank you. i got busy there. we had another question there. >> i'm going to take a question from one of the reporters online. this is from mark, a question for president keel. can this bipartisan coup be used to treat tribes as a 51st state, especially for medicaid and other entitlement programs? >> i think he's referring to maybe this bipartisan cooperation. that would be great.
i would love to see that. i think that indian country would love to see this entitlement as a 51st state. there's been a lot of talk about that in the past, and we talk about particularly at the centers for -- what is it, c.m.s.? i know they've talked about some of these regulations and how we can expand those. i know that there's somebody here who's leading efforts in indian health services at h.h.s. to get indian people and indian programs involved and how we can he can up and down the services to all native americans. and i want to thank her for that support and that help. that's a great topic for us to discuss. it's something we need to continue on. thank you for that question. i know i didn't answer it, but i thank you for the question. >> mary jane oatman with the national education association's office of
community minority outreach. i want to commend you for bringing the digital divide for bringing this into the indian country, specifically into the classrooms that are educating our children. are we going to have a pulse on how many of our native youth across the country and public schools had access and opportunity to participate? and as a followup, maybe a challenge for you to engage our native youth through like a twitter feed or twitter hall or something, because i reallyment to know what native youth's feedback from this phenomenal event is. >> great, thank you. yes, we did an extensive outreach. we will have a tweet here from a youth who wants to know, barbie -- well, i think this is her name, terminator barbie. so maybe i shouldn't say that. but how do we connect to -- connect our youth to the leaders who spoke during the national conference of american indians, and do we have a
mentor program? so, yes, we do have a mentor program at ncai. we have fellows and interns that come here, a good share of our staff, our fellows and interns, and we also have a youth commission. we have a number of youth partners that we collaborate together with, including niea, and we developed a youth agenda, so we can connect to youth in many ways, and we'll continue to connect with youth, and we have a great agenda for this year. one last question here. can i have a question from the audience here? >> you speak of the bipartisan approach that's taken sometimes in congress on different pieces of legislation, but that doesn't always translate into success. can you identify two pieces of legislation that you believe must be passed by the upcoming
session of congress before it can be viewed as a success by the indian country? >> i think the most pressing need we have is a criteria fix. the legislation, that's been the priority for indian country for the past several years, and it has been -- it almost was passed last year. we almost got there. it ran into a hold, i believe. but that is the number one priority. the other would be, as we mentioned earlier, the violence against our women act reauthorization and to save native women act. all of those have bipartisan support, but number one would be the criteria fix. we absolutely need that fixed today. thank you. >> i apologize. we ran out of time for questions. but everyone who sent us an electronic question online, we
will be answering those questions to you. if you have other questions, we'd be glad to answer them. you can get ahold of our press office or go to ncia.org, and those questions will be forwarded on to us. i want to thank you for listening and being part of our annual state of the indian nations address. and on half of the national congress of american indians, i'd like to thank c-span, native voice one, and the tribal public, and radio stations across the nation, and all the online viewers at ncia.org for realizing the importance in covering this event today. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]
>> over the next hour and a half, more of our coverage from the world economic forum in switzerland. british prime minister david cameron was there to talk about the future of the you're. he's next. in 30 minutes, a discussion of peace proposals for the middle east with a panel that includes israeli president shimon perez and the president of the palestinian authority. on "washington journal" this morning, we'll discuss real estate foreclosures with the president and c.e.o. of the mortgage bankers association. journalist thomas edsall will join us to talk about his new age, "the age of austerity."
and we'll focus on u.s. manufacturing with chris savage from the census bureau and chad moutray, chief economist for the national association of manufacturers. "washington journal" is live on c-span every day at 7:00 a.m. eastern. a road to the white house coverage continues today with several events in florida. g.o.p. presidential candidate newt gingrich speaks to the hispanic leadership network conference at 11:00 a.m. eastern. that conference in miami will also hear from mitt romney. you can see it live at 12:20 p.m. eastern. presidential candidate rick santorum will also be in miami today speaking to the latin builders association. that's live at 1:30. c-span's road to the white house coverage takes you live to the candidate events in florida through the weekend, moving up to tuesday's g.o.p. primary. >> by the end of my second term
-- we will have the first permanent base on the moon, and it will be american. and by the end of 2020, we will have the first continuous propulsion system in space capable of getting to mars in a remarkably short time, because i am sick of being told we have to be timid, and i'm sick of being told we have to be limited to technologies that are 50 years old. >> and when the founders said that the creator had endowed us with certain unalien rights, among them life and liberty and the pursuit of happiness, they laid out a path for america that was not temporary, but enduring, a path that says, in america, we can pursue happiness as we choose. we do not need a government to tell us what kind of car to get. we do not need a government to tell us what kind of light bulb we need to have. we do not need a government to
tell us what kind of healthcare we're going to have. >> see what the candidates are posting on social media, along with political reporters and viewers like you at c-span.org/campaign2012. next, british prime minister david cameron on the future of the euro zone. he spoke at the world economic forum in switzerland. even though the u.k. is not part of the eurozone, mr. cameron outlined ways he thought europe could recover from its ongoing financial crisis. leaders, philanthropists, and economists. >> good morning, ladies and gentlemen. it gives me great pleasure to introduce the prime minister of the united kingdom, mr. cameron. i think we are very privileged after having listened yesterday to chancellor and to hear now
the prime minister talking about his vision for the future of the world, for the future of europe, and i should add, the euro, so prime minister of the united kingdom, please, welcome. >> thank you. [applause] thank you very much. [applause] >> thank you, klaus, for that introduction, and it's great to be back at this economic forum, but we meet today at a perilous moment for companies right across europe. growth has stalled. unemployment is rising. the prospect of europe getting left behind is all too apparent. while china grows at 8%, india at 7%, and africa at 5.5%, the
european commission forecasts that the e.u. will grow by just 1.6% in the whole of 2012. even that is assuming that the problems in the eurozone get better, not worse. yesterday in britain, we had the official figures for the final quarter of last calendar year, and they were negative. other large economy of europe are forecast at a similar outcome or worse. in just four years, government debt on the e.u. citizen has risen by 4,000 euros. direct investment fell by more than two-thirds, and a fifth of all young people are out of work. this is not a moment to try to pretend there is not a problem; nor is it a moment to allow the fear of failure to hold us back. this is a time to show the leadership that our people are quite rightly demanding.
tinkering here and there hoping we'll come to a solution simply is not going to cut it anymore. this is a time for boldness, not precaution. boldness in what we do nationally, but boldness also in what we do together as a country. now, in britain, we have been bold. we were faced as we came into government with a biggest budget deficit in our peacetime history, more than 10% of our gdp. we had the most leveraged banks, worse indebted households, and the biggest housing booms. to be cautious would have been catastrophic. instead, we were bold and decisive. we formed the first coalition government for 70 years. we legislated for a fixed term 5-year parliament to help to give people the confidence, stability, and credibility and put forth an aggressive set of
plans to get the economy back on an even keel. 5 billion pounds saves in the first financial year, ones already underway, the cost of government cut, public sector pay, frozen, pension age increased. let me give you one example for a form of public sector pensions. this is a difficult issue for any government. we want public servants to have good pensions. we've ensured that is the case, but at the same time, we have actually cut the long term cost in half. by taking bold decisions to get to grips with the debt, britain has shown it is possible to earn celt and get ahead of the markets. borrowing costs fell to the lowest in a generation, and we'll be equally bold in meeting key ambitions which is to support enterprise and to make britain the best place in the world in which to start or grow a business. we are pursuing a probusiness
agenda, scrapping red tape, simplifying planning, reviewing planning, developing the tax regime with the tax coming down to 23%, making bold investments in new infrastructure including high speed rail, and while we are fiscal conservative, we are monetary radicals injecting cash into the banking system introducing credit easing measures to make it easier for small businesses to access finance. my message to you and this special olympic year for britain is that we are a country that is absolutely committed to enterprise and to openness, come to britain, invest in britain, be part of this special year in a truly great country, so, yes, in britain, we're taking bold steps necessary to get our economy back on track, but my argument today is that the need for bold action at the european level is equally great.
europe's lack of competitiveness is its achilles heal. of all the talk, the lisbon strategy failed to deliver the reforms we need. the statistics are staggering. as measured by the world economic forum, more than half the e.u. states are less competitive than they were at this time less year while five e.u. states are less competitive than a country that's iran. five times as much is invested in the u.s.. our single market, one of our greatest strengths, remains incomplete, and there's still a colossal 4,000 professionals across the european union in which access is regulated by government. that is not all. in spite of the economic challenge, in spite of the unemployment challenge, we are still doing things through the
e.u. to make life even harder. in the name of social protection, the e.u. promoted unnecessary measures posing burdens on businesses and governments and can destroy jobs. the agency worker's director, the pregnant worker's director, the working time director, and, nsk, there's the proposal for a financial transaction tax. now, of course, it is right that the financial sector should pay their share and in the united kingdom we're making sure that's the case with a bank levy and the fact we charge on shares. these options other countries can adopt. if you look at the european commission's own original analysis, that shows that a financial transaction tax could cost the gdp of the european union and could reduce it by 200 billion euros and could cost almost 500,000 jobs, a fourth of
much as 90% of markets away from the union. when we struggle to get our economies growing is madness. it shouldn't go on like this. that is why britain is arguing for a pro-business agenda in europe. this is not just a british agenda. over the last year, we have spearheaded work with 15 other member states across the e.u. inside and outside the euro zone. we called for deregulation and liberalization policies, and ideas known at the heart of what the european commission is promoting too. together, we're pushing for the completion of the single market in services and in digital. they could add alone 800 billion euros and lead the drive for microbusinesses with regulation, both new and existing. we have to be bolder still.
here is the checklist. bold e.u. measures should be tested for impact on growth. we need a target to reduce the overall level of e.u. regular larks and we need a new portionalty test to slash the number of regulated professions in europe. together with our international partners, we have to take action to get trade moving. now, i'm not going to give you the expanded speech. last year at this forum, leaders called for the effort to conclude this in 2011. it was a make or break year. it was. we have to be frank about it. it didn't work, but we must not give up on free trade. let us step forward with a new ambitious set of ideas to take trade forward. first, rather than trying to involve everyone at once, let's
get bilateral deals done, e.u. trade agreements with india, canada, and singapore finalized by the end of this year completing all the deals now on the table can add 20 # billion euros to the e.u.. this could have a bigger impact than all other agreements put together. next, let's be more credittive in the way we use the multilateral system. far from turning our back on multilateralism, we need the continued work of the wto to prevent any collapse back to protectionism, to take account of the interests of the poorest countries in the world, and to ensure that the wto framework is fit for the 21st century. i also believe it means going forwards, action coalition of the willing to countries who want to and forge ahead with more ambitious trade deals of their own consistent within the wto framework.
there's proposals out there already like the transpacific partnership, but why not an ambitious deal between europe or africa or a planned africa free trade area. it's a bold move on trade that can deliver tangible results this year. i propose we start working on it immediately. now, of course, the most urgent question facing all of europe right now is how do deal with the eurozone crisis, and this is where i believe europe needs to be boldest of all. the bank provided extensive additional support to europe's banks, many eurozone countries are taking painful and difficult steps to address their deficits and to give up the degree of sorch -- sovereignty over the degree of governance of the countries in the future. that was the agreement to set up the fire wall. all of these are welcomed and necessary steps, and i don't
underestimate for a moment the leadership and the courage that's got us this far. we need to be honest about the overall situation. the crisis is still weighing down on business competence and weighing down on investment. a year ago, bond rates were 5% in spain, nearly 5% in italy, and more than 7% in portugal. today, they are still 5% in spain, up to 6% in italy, and 14% in portugal. we still need those urgent short term measures to be properly put into effect. the october agreement needs to be fully implemented. uncertainty in greece has to be brought to an en. europe's banks must be properly recapitalized, and the european fire wall needs to be big enough to deal with a full scale of the crisis and the potential con they on, and chance leer america --
chancellor merkel is right we have to get to grips with our debts. we have to be serious about the long term consequences of a single currency. i'm not one of those people who think single currencies will never work. look at america and the united kingdom, but there's a number of features common to all successful currency unions. central bank can comprehensively stand behind the currency and the financial system. deepest possible economic integration with the flexibility to deal with economic shocks and a system of fiscal transfers and collective debt issues to deal with the tensions and imbalances between different countries and regions within the union. currently, it's not that the eurozone do you want have all of these, but it doesn't really have any of these. clearly, the countries are close enough in their economic
structure than tensions are less likely to arise. when your balances are sustained, and some countries do better than others and year after year, you can face real problems. that is what the current crisis is demonstrating. of course, private capital loans can hide problems for awhile. in the eurozone, that is what happened. the markets lose confidence and dry up, and you're left in an unsustainable position. yes, tough fiscal discipline is essential, but this is a problem of trade deficits, not just budget deficits. it means countries with those deficits making painful decisions to raise productivity, to drive down costs year after year to remain their competitiveness. that doesn't happen overnight, and it can have painful economic and even political consequences. nor, in fact, is it sufficient. you need the support of single
currency partners, and as christine set out, the system of fiscal integration and risk sharing absolutely in the creation of euroarea bonds made that support work. as one suggested, the flip side of austerity and the deficit countries with the action to put the weight of the surplus countries behind the euro. i'm not pretending this is easy. they are radical, difficult steps for any country to take. knowing how necessary and how hard they are is why britain didn't join the eurozone, but they are of what's needed of the single currency as now constituted are to work. some say it's britain making the point. you're not in the euro and vetoed adding a new treaty to the european union. i'll answer that directly. i understand why the eurozone members want a treaty inside the european union.
if they do, there have to be safeguards for those countries in the european union who have no intention of joining the single currency. i didn't get those safeguards, so the treaty is not going ahead inside the european union. let me be clear, to those who think not signing the treaty and somehow britain is walking away from europe, let me tell you, nothing could be further from the truth. britain is part of the european union, not by default, but choice. it fundamentally reflects our interest to be part of the market on our doorstep and have no intention of walking from it. let me be clear. we want europe to be a success, and all the measures we'll proposing for the european com -- counsel can propose those successes, but we want to succeed as an economic and
political force, as an association of countries with a political will, the values, and the voice to make a difference in the world, and we can make a decisive difference, and together with president sarkozy, there was the new sanctions with the world's exports that the world doesn't have to confront a nuclear armed iran. in syria, we've taken the lead against the repressive violence, and we won't let up until he steps aside. in libya, we secured the u.n. resolution and put together the multicoalition faster than any time in our history. british and french pilots led the way together in the early hours when the fate of ben bengi was at stake, and we saw it through helping the libyan people see it through. i'm proud to work with our european partners and what we can achieve. i stood on the platform and say
we can recover dinism, and i believe we still can, but only if we are fold, fite for prosperity, get to grips with debt, take bold regulations on market, on trade, and address the fundamental issues at the heart of the eurozone crisis. all of these decisions, a lie in our own hands, they are the test of europe's leaders in the months ahead. yes, the stakes are high. they are incredibly high, but there's nothing about the current crisis that we don't understand. the problems we face are manmade, and with bold action and real political will, we can fix them. thank you. [applause] >> we'll take some questions. we have some moving microphones,
so fire away. you can say who you are and where you are from. >> hi, question over there. >> rob -- [inaudible] prime minister, in your view, it's the single most important thing the eurozone could do to see a way through the crisis? >> i think the single most important thing is deal with the short term issues. there's short term and long term. short term has to the to be greece, banks, and fire wall, and if you do those three things quickly and efficiently, you'd ease the sense of crisis there is accompanied by what the european central bank is already doing and could do more. by 2012, there's a sense that the eurozone leaders want to take the steps that will ease the short term problems. as i said in the speech, it
doesn't address the longer term tensions at the heart of the currency. we jar about competitiveness and trade deficits as much as they are about budget deficit, and i think it's that part of the piece that needs further work and attention and that's what chancellor was talking about yesterday and christine as well. >> banks are thinking the eurozone is the worst of the crisis, and do you think that's wishful thinking? >> i think what's happening still at the moment in the term of the high bond deals in country that are effective, hold back the growth and their participation in the european economy. that still, as i said in my speech, it's a little bit better than it was at the end of last year, but it still is not fixed. you've got to fix, in my view, the short term issues before you can go on and then deal with a longer term problem. look, why wasn't this problem -- why didn't it manifest earlier? ask you're, there's many years
of successful eurozone operations, but, of course, in those years, private sector financial players in ways were covering up for the deeper competitiveness problems, and as they dried up, and unless they return, you have to address the fundmental problems at the heart of the eurozone. as i said, every other currency has those feature, and it seems to me logical with a successful single currency to adopt some of those if it's going to succeed in the long term. gentleman here. >> from the united kingdom. prime minister, a lot of discussion in the eurozone this week about redefining and remodeling capitalism, and you recently made a speech on the subject. are we on an up evidentble path towards -- inevitable path towards state
capitalism? >> i don't think we are. those who believe in market capitalism have to make the defense against state capitalism, and at the heart of it is the root of all. it's a hard thing to advertise to international investors, but it's a good tip to see how many times the government is in the court case. we lose them all the time, but it's a good test of are you living in a free country where you enforce your rights and property rights and everything else. i think the genuine open free market economy is the european economies have to stand up and shout about values of freedom and democracy in the rule of law for those who are the things that make us safe and great economies in investments. i don't think we should give up in the battle. the challenge in a way is simple. we have the two faces of europe. at the face of europe that people from the outside look at that they admire still which is the great values, the great
dmak, the great right, the fantastic culture, they are great strengths for europe, but the second face at the moment is the economic stagnation, low growth, rising unemployment, and lack of competitiveness. we can change that. we shouldn't be negative about it. if we deregulate the economies, make them competitive, tax rates down, pay for the long term health care and social needs, change the way our economies work, we can be a success story in the future, but we have to demonstrate the political will to do it; then we can share both faces with the world and take on anybody because we have the culture, the rights, history, and brilliant values, but the strong economy and prospects for the future, but we have to deal with the second face this year. gentleman over here. >> governor of bula